BLACK SWANS AND PROGNOSTICISM

Nassim Taleb in his 2007 book ”The Black Swan – The Impact of the Improbable” pondered the effects of events that are not only rare and consequential but predictable only in retrospect. We don’t see them coming and often explain them as having been obvious. What is of interest here is Taleb’s view of 9/11. Was it a black swan? Maybe it was a vicious black swan. Such an event helps creating the conditions for it to happen. “Had a terrorist attack been a conceivable risk on September 10, 2001, it would not have happened. Humans are engaged in what is called hindsight bias. There is a tendency to try to believe after the black swan occurred that it was predictable.

In the case of 9/11 certain facts were discovered that resulted in great controversy. As Robb wrote after the publication of the Taleb book:

In their analysis of black swans (which by definition will likely never be repeated), human beings engage in what is called hindsight bias. This is the tendency to believe that the event was predictable based on knowledge gained after the event happened. In effect, people unknowingly substitute current knowledge of outcomes into the gaps of knowledge that were present when building earlier expectations of potential events. In regards to 9/11, Nassim points out the following:

“The flaw is that specific facts taken out of context prevents sufficient consideration of the larger informational landscape. A better approach is to develop general knowledge that can be used to improve future responses (improvements in intelligence information flow for example).”

It is also impossible to guard against every attack. Compare Pearl Harbor. There are not infinite resources in the West. Certainly the attackers (and coming terrorist attackers) hope to make the West expand enormous sums on defense against terrorism.

Taleb believes governments should hire creative thinkers that can imagine the impossible. The reason, unstated, is that these people will challenge existing expectations.

Robb believes there is a continuing pattern to follow in terrorist attacks. If the pattern should be considered an essential element of the general knowledge this can be used to prevent future attacks. International terrorism is in the process of evolving into new forms. Strategy is a dynamic process, it evolves.

Creative thinking on what these new forms of terrorism will likely be is essential.
With the right methods prognosticism it could probably be possible to predict improbable events. But what about the present global financial crisis?

Taleb: For the last years, I have been telling anyone who would listen to me that we are taking huge risks and massive exposure to rare events. The Black Swan is a philosophy book (epistemology, philosophy of history & philosophy of science), but I used banks as a particularly worrisome case of epistemic arrogance –and the use of “science” to measure the risk of rare events, making society dependent on very spurious measurements. To me a banking crisis was unavoidable and NOT A BLACK SWAN, just as a drunk and incompetent pilot would eventually crash the plane.

Further from Taleb’s writings: Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse.

There is a linkage between global terrorism and globalization. The global guerrillas have discovered the existing fragility in the Western system.

One Response to “BLACK SWANS AND PROGNOSTICISM”

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